Why Banks Distrust Students?

Last year in November, I visited my bank to deposit a check from an American client paying me for some freelance articles I wrote for her. The bank officer appeared uneasy at the sight of the check and started asking me questions in a tone that I felt was not very welcoming: “why does your account lack a history of foreign transactions?” “Isn’t your account balance quite low?” “What’s the money being paid for?” etc.

I answered his questions with patience, hoping he’ll complete the procedure for depositing the check and stop wasting my time. Instead, he surprised, in fact irritated me, by telling me that I needed to deposit 200 rupees in my account before he’d deposit my check?

State Bank Pakistan
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“Why is this required?” I asked, not quite aware of any such rules. He replied that this was indemnity against the possibility that the check might bounce and the mailing charges would be the bank’s loss. I asked why the check would bounce. And then the cat came out of the bag.

“Are you a student of this university?” he asked looking at me as if trying to judge me.

“No, I am a professional writer,” I replied. This worked wonders! Suddenly his expression and tone became relaxed and friendly.

“Okay then, you don’t need to deposit the money,” said he. “I thought you were a student. I don’t trust students.”

While this sparked my curiosity about the point of distrusting students, I just kept quite to save time and rushed out of the bank to my residence. But soon as I found time to ask one of my friends I got my answers. I visited my friend Faisal, a bank officer, and asked him to tell about this trust and student affair.

He explained to me that banks in Pakistan, all of them, are careful while dealing with students, especially when it is a matter of foreign transactions through the bank. The main reason for this is the ever-growing trend of students asking for bank statements of loans drawn for education in foreign countries. To get a student visa to a foreign country, students are required to provide proof of their financial strength enabling them to pay for their expenses in the host country. Many of the students don’t have their own money for this purpose and hence they seek bank loan statements, sometimes insisting on fake statements that can endanger the credibility of the bank.

For several years, there is another trend growing in the country, i.e. bank officers having their own money offer to transfer the money to an account in the name of the student for a month or two, that is until the student’s visa is issued, and then getting it transferred it back into their own account while charging the student a certain amount. This can be about a hundred thousand rupees or more for depositing around 2 to 3 million rupees in the student’s account. Of course, a trusted mutual friend is needed to ensure that the student returns the amount without any fraud to the banker after his/her visa is issued.

Faisal told me that these are almost always male students who visit banks for such transactions. Due to this quest for the west, students now make a “suspicious” category for banks such that banks are cautious in dealing with students in both financial and non-financial transactions.

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